Home Appraiser in Sacramento

I recently appraised a custom home, and when the order came through the property looked overpriced. I thought, “Yep, I’m going to look like the bad guy when this one appraises too ‘low'”. However, after doing all my research AND asking all the right questions to the listing agent, this property was clearly worth slightly more than the contract price. Ultimately I left the transaction feeling a bit curious why the agent did not offer more information about the property until I asked. At the end of the day her insight was actually vital since I found out there was a back-up cash offer above asking, one other full-priced conventional offer, and another listing coming on the market priced at a similar level – not to mention the feedback on the layout, landscaping, and location. The agent spent so much time, effort, and money to market this listing, but when it came to communicating with the appraiser, her approach was hands-off.

A “cheat sheet” to communicate with appraisers: What if you had a document on your desktop to simply address some of the questions appraisers tend to ask? You could quickly fill it out, and then email it or give it to the appraiser in person. Check out the document below, and you can download in WORD or a PDF.

This document addresses how the market responded to the subject property, and it also gives an opportunity for the listing agent to share any insight about the neighborhood, school district boundaries, market trends, important reasons buyers might be looking in the neighborhood (that the appraiser may or may not know), or insider knowledge about the subject property or street. Remember, this is potential market data, so it can be important for the appraised value. Also, you can look like even more of a rock star to your client when your client sees how intentional you are with the appraiser.

Some quick tips:

Save this document to your desktop and use it for each listing.

Tell the truth in everything you write.

Feel free to skip, delete, or add any categories.

Take 10 to 15 minutes to answer questions.

You don’t need to write a novel, but it’s okay if the document ends up being more than one page (try to keep it less than two though).

Remember, this information is about sharing facts instead of pressure to “hit the number”. This is exactly why it’s okay to share this type of information.

Try to avoid subtle pressure statements like, “Please get value as high as possible”, or “We really need this one to work out”, because that comes across as trying to steer the value.

Be specific about upgrades. For instance, instead of saying, “The house was remodeled throughout,” unpack what that means and when any remodeling was done (if you know).

If you don’t feel comfortable providing sales or listings to the appraiser, that’s okay. However, if you do provide sales, make sure they are actually competitive to the subject property. If you know the sales well, you can always write out any differences at the top of the MLS sheets. I recommend saying “here is data I used to price the property” instead of “here are your comps”. If the appraiser doesn’t want to take any sales from you, maybe the appraiser would still take this information sheet.

Is there anything you’d tweak about this document? Speak up or offer constructive feedback below. If there is enough response, I can post a second round of an improved document in a few weeks. I’m all for better communication, and I would LOVE to get more information like this on a regular basis.

Questions: Do you think this document would be useful? Anything you’d add or take away?

Now that November has passed, let’s compare it to previous Novembers in Sacramento County. Here is a chart of all SFR sales in Sacramento County on MLS from November 2008 to 2012. What do you see?

Some of my observations:

An Increase: Property values have generally seen an increase from 2011. As a side note, don’t be surprised if the Assessor increases your property taxes for 2013 (the value will be based on January 1, 2013). They’ll post new information for 2013 taxes come July 2013.

Not Millions: There are very few million dollar sales on MLS over these past five years. There were really only a handful, so I chose to exclude them to have a more focused graph. Email me if you want the image with all sales.

Comparing to Previous Years: Today’s values are starting to be more in sync with values from the past few years. I’ve been seeing quite a few home owners selling properties (not at a loss) or refinancing homes they purchased in 2009 or 2010. This isn’t true in every neighborhood or situation of course, but many of these sales have a bit of equity or they are more on par with what they were purchased for originally.

Slow Down? Despite a more traditional slowdown during colder months, buyers were still hungry for real estate in November. I know quite a few Realtors who were squeezing in some work during the holiday. While sometimes in the course of my research it has seemed the market has been slowing down in preparation for colder months, it just seems to keep going strong.

Other: This is where you include your take in the comments below.

I’d love to hear your thoughts on the market right now. What do you expect to see in coming months? Will the market cool off as it usually does? Or will a lower inventory and lower rates keep the market feeling hot?

Did you do Movember? While we’re on the subject of November, did anyone do Movember? If so, great job. It’s a fun and excellent cause. On an added superficial note, I know mustaches seem to be coming back in style, but I just cannot do it. I feel too much like Magnum PI (maybe that’s not so bad though). Am I alone?

You know what they say when you’re hunting for love? Look closely. When you don’t, or if you intentionally ignore the red flags, there can be major trouble ahead. The same is true in real estate. If you don’t look closely when shopping for a home, or you don’t know what to look for, it can end very badly for your wallet.

I asked five Sacramento Realtors for their take on what buyers should look at carefully during the home-buying process, especially when purchasing a flipped property. I see these things all the time on appraisal inspections, so this is definitely important to pay attention to.

Max Boyko – Realtor: Here are some things that get missed that I would consider important: Insulation (although can always be blown in later); Remodeled home but may have original plumbing and electricity which may leak; Roof leaks may get covered by paint on the inside; and Showers and bathtubs are rarely tested to make sure they are leak proof.

Sheri Negri – Realtor: Here are some things I help my buyers look at in general and especially on homes that have been flipped and are poor quality: I look for signs of dry rot inside and outside the home. Sometimes dry rot is masked by a bad paint job, but even then you can tell if you look closely and feel the wood in most cases. I look at any water stains on the ceilings or walls that indicate a leak somewhere. I look to see how stable or unstable the fence is in the backyard and whether or not any repairs need to be done. I look for potential FHA flags such as: is the firewall completely drywalled, are the junction boxes covered, is the hot water heater strapped, are there any leaks in any of the toilets, do faucets work, potential roof issues, areas that need caulking, etc. I check underneath the sinks to ensure there are no major leaks. I check to make sure the bathrooms don’t have any signs of water damage. I take a close look at the water heater and HVAC to see the visual condition. I look at the roof from the front and the back to look at the visual condition to see if there are any major issues that might need to be repaired. I look for any cracks inside and out that might be more than the house settling. If a flipped property, I look for how they remodeled the cabinets, counter tops, flooring, doorways, trim, and the like. I also look for room additions where they may not have put heater/air vents, or electricity. Many flippers do a poor job at finishing bathrooms and kitchens, so I like to point out any flaws I see to my clients.

David Yaffee – Realtor: In today’s real estate market, many buyers are quite excited to see a flip property after viewing foreclosures and short sales, as a lot of foreclosures & short sales need cosmetic work or more. Flips can seem like a dream as you are getting a mostly updated home, but it is important that buyers keep in mind these homes are not perfect. Don’t let new appliances, flooring, paint etc stop you from looking at the home in detail. Some of the people who flip homes do not obtain permits for the work done, use non-licensed workers, and change the original layout of kitchens & bathrooms. This does not mean the home is going to fall down or the work is bad, but it is important to make sure you properly inspect the property. During your inspection make sure to ask your inspector if the work appears to be up to code. I often see that the type of vent or flue pipes used being called out by home inspectors as they are not the proper type. I also encourage my buyers to looks at the quality of the work because if it looks poor, chances are there are other flaws with the work done. If it is not provided to you when receive disclosures, have your agent ask the listing agent for any documentation that can provided on the work that was performed at the property. Investor flip properties are often beautiful homes and great opportunities for buyers, but you still need to inspect and protect yourself from potential issues.

Jeff Grenz – Realtor: All these items I see regularly in flips – as in I saw all these in the last 10 days on 3 different homes. All are code violations and so simple and well understood by licensed plumbers and building inspectors that if missing or improper, they are clear signs of problems.

Water Heater Installation problems: Vent in direct contact with a combustible (aka wood) as the requirement is 1″. Straps are loose and/or the tank moves in any direction (it must be braced or snug at rear also). Missing TPR (temperature and pressure relief) line -OR- it requires water to flow uphill (the TPR exits the water heater usually on the top and water must flow level or down hill until it exits outside, normally with a copper line).

Walking through homes with recent rehab, I look for steps that are even, consistent and feel like I expect them, stair railings that are firm, hoods that are at least 30″ above and the full width of gas ranges below (check manufacturers specs). Toilets set firm.

Another easy check, go online for building permit records vs. age of roof, water heater, HVAC. If there are no permits within the past 20 years, but any of those look newer, its time to inspect more closely, as lack of permit is a pretty good indicator of lack of license and skills.

Bruce Slaton – Realtor: Exposed white PVC outside, is this the correct grade for exposure or could it lead to broken pipes? Duct tape on anything electrical or for that matter anything. If they walk into a room and it reminds them of a patio or the materials are different from the interior of the house, could be a red flag of a converted patio or addition. Any cracks that they can stick a quarter in. Dirty AC filters, this could: a) Be a sign of deferred maintenance; and b) Could lead to a home warranty repair denial later. Pet urine damage on exterior of AC condenser. Storage in the rafters of the garage. Lofts in condos being used as living space. For that matter, hot water heaters in rooms. Fences that look like they are at the end of their life, good idea to talk to that neighbor before and see if it will be your cost or shared. Last but not least NEVER accept your agent telling you “don’t worry about it, the home warranty will cover it”, chances are it will not because it is pre-existing. Always get a professional home inspection.

I hope this was helpful. I’d love to hear your thoughts in the comments below.

Questions: Anything you’d add to the list? Have you ever bought a home only to find out something was wrong? What will you look at more closely during your next home purchase?

I wrote an article called “Finding Your Inner Appraiser Voice” on Appraisal Buzz. It was an honor to be asked to contribute since The Buzz is well-known and has a huge readership. My piece sounds so psychological from the title, but it’s really about the power of blogging for business and five questions to ask yourself to help hone a blogging voice. It’s very practical and applicable to many industries – not just appraisers. I hope it’s helpful, and I’d love to hear your thoughts.

Finding Your Inner Appraiser Voice

I spend zero dollars to market myself online, yet I earn new business each week through my appraisal blog. The general public might think a blog about appraisals would be excruciatingly dull and very un-sexy, but trust me, there are so many interesting topics to discuss.

Three and a half years ago I started the Sacramento Appraisal Blog as a strategy to connect with clients and earn new business in an HVCC world (yes, my business felt the impact of HVCC). Seven hundred articles later, I can definitely say my blog has helped open up countless opportunities for new business, non-lender work, referrals, media interviews, networking and clout for my company – not to mention better Google rankings.

If you clicked over from the article, thanks for visiting. If you want to connect further, my links are below. If you haven’t read the article, feel free to check it out. Thanks everyone. I sincerely appreciate your support, encouragement and anyone who stops by my little corner on the web.

Disclaimer

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The information on this website is meant entirely for educational purposes and is not intended in any way to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or any other potential real estate or non-real estate purpose. The material found on this website is meant for casual reading only and is not intended for use in a court of law or any other legal use. Ryan will not appear in court in any capacity based on any information posted here. For more detailed market analysis to be used for an appraisal report or any appraisal-related purpose or valuation consulting, please contact Ryan at 916-595-3735 for more information.

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